CBA launches invoice financing product for SMEs
The big bank is deploying a digital invoice financing solution to allow small businesses to use their unpaid invoices to access credit.
The Commonwealth Bank of Australia (CBA) has announced the launch of a “self-service” invoice financing solution for SMEs.
The big bank announced its new Stream Working Capital offering, a digital working capital platform through which small businesses can borrow on their unpaid customer invoices.
Small businesses eligible for “Select” will be able to access Sworking capital this week (June 24), the product to be more widely available in early 2022.
While the solution will initially be available through the direct channel, it will be available through the broker channel when it is rolled out more widely in 2022, the ABC said.
What it offers
The Stream Working Capital platform – which will be limited to business-to-business transactions – will provide up to 80% funding for the value of unpaid invoices.
The funding application process would take 72 hours.
To be eligible for the digital lending platform, the minimum invoice value must be $ 50,000.
Credit limits would then be “tailored” to the business and access to cash would increase / decrease as the value of unpaid bills changes.
The loan amount would automatically decrease as the bills are paid.
Businesses won’t have to pay a setup fee and can use as much or as little as they need. The platform will also be available 24 hours a day.
According to the ABC, companies should pay interest on the amount they withdraw, with interest calculated daily on the outstanding balance. The loan balance is automatically adjusted daily based on the payment of invoices from the company’s customers.
The ABC has partnered with the Waddle invoice finance platform to enable Stream Working Capital.
It uses digital technology and a live stream of customer data through cloud-based accounting software, such as Xero (which acquired Waddle in August 2020), to bolster the working capital needs of a business client. The ABC said it was the main bank to do so.
The Stream Working Capital platform therefore allows companies to link their accounting software and nominate invoices in real time with a unique and automatically reconciled “source of truth”.
It provides visibility into a company’s cash flow situation on all invoices designated for funding, he added.
According to the ABC, the new product will give SMEs access to greater and more flexible financing as the business grows, and reduce manual processes by up to 80 percent.
“Facilitate access to capital for small businesses”
Mike Vacy-Lyle, senior executive at CBA Group, said that while small businesses have traditionally used fixed assets such as real estate to secure an overdraft or loan, Stream Working Capital would instead allow clients to access funds by using their unpaid bills as loan collateral.
Commenting on the release of the platform, Mr. Vacy-Lyle said, “Cash flow is one of the biggest issues facing small businesses, so we looked at how we can meet working capital needs. customers, helping them maximize cash flow and drive business. growth.”
Clare Morgan, executive director of corporate loans at CBA, said the new solution would allow businesses to access cash flow faster to cover short-term operational needs and be better positioned to take advantage of capital assets. for longer term strategic goals and investments.
“Having access to cash flow is vital for all Australian businesses, whether they are a sole proprietorship or one of the largest companies in Australia. We want to simplify the working capital process, especially for small businesses, ”she said.
“Our customers have told us they want to be able to keep more inventory and build relationships with more suppliers to mitigate supply disruptions. They also face increasing pressure from suppliers who want to be paid sooner and buyers who want to extend payment terms.
“Using invoices to access credit solves this problem and can provide some peace of mind for businesses that can now access the money stuck in their invoices so they can pay suppliers or hire employees. It’s a critical component in helping small businesses recover and grow as they continue to navigate a new operating environment during the pandemic. “
Waddle Founder and Director Simon Creighton said: “We are delighted to partner with CBA to make it easier for small businesses to access capital.
“We are passionate about helping small businesses grow. We see this as alleviating time-consuming processes like automating much of the financial process like credit scoring, underwriting, and tracking.
He concluded, “It also gives small businesses the ability to better manage their cash flow, which is essential in today’s environment, and this partnership will provide them with the flexibility and support they need. “
The CBA recently highlighted in a press briefing that it is increasingly focusing on digitization, including plans to use transaction and cash flow data from its 700,000 business customers to form prompts such as loan suggestions.
During the press conference, Mr. Vacy-Lyle said that the lender builds capabilities to help corporate clients forecast their cash flow needs and provide them with digital lending and borrowing solutions based on those anticipated future cash needs.
[Related: CBA hikes floor rate, predicts 2022 rate rise]
Malavika Santhebennur is the Mortgage Securities Editor at Momentum Media.
Prior to joining the team in 2019, Malavika held positions at Money Management and Benchmark Media. She has been writing about financial services for six years.